There’s an old trading maxim that volatility happens around the highs and lows of moves. We’ve certain seen a fair bit of that over recent sessions, so perhaps a high is or has formed. After the strong run in equities we’ve had in 2013 so far, this would not be especially surprising around now. A bit of Eurozone-angst makes an obvious trigger for a bout of selling to occur. However, I firmly believe it’s important to keep an eye on the bigger picture. European equities remain cheap and the ECB has scope for further monetary intervention if the markets seize up again.
I am playing wait-and-see with the indices, but certainly am not averse to shorting if the opportunities arise, despite my bullish big-picture view. I would buy EURGBP and sell GBPUSD today too.
Click here for PDF version.